Senate Economics Legislation Committee, , 8:13:24 to 8:23:59
Senator McKenzie raises concerns about the 30% minimum tax on discretionary trusts affecting the Australian Olympic Foundation's ability to fund athletes.
Topics: Law reform, Government spending
Speakers: Hon Bridget McKenzie, Hon Katy Gallagher, Hon Tim Ayres, Katrina Di Marco, Unknown Speaker, Senator Lisa Darmanin
Ah, thank you so much. Thank you so much. I have um some questions around uh the 30 percent minimum tax on discretionary trusts application from July 2028. Um the Australian Olympic Committee funds our Olympic teams through funding provided via a trust under um the AOF, the Australian Olympic Foundation. The AOC is an income tax uh exempt entity. The foundation provides distributions from a non-exempt discretionary trust. The AOC's um submission to Treasury's consultation on the minimum tax on discretionary trust raises concerns that Labor's changes to taxes on trust will significantly impact on the financial capability of the AOC. Um what impact will the government's tax changes have on the tax treatment of the Australian Olympic Foundation non-charitable discretionary trust?
Senator, I'll respond to this really briefly. Um we are aware of these concerns. I think they've made submissions and consultation processes. I and other officials, we're not going to comment on individual taxpayer circumstances, but we are continuing to work with stakeholders on a range of transition in implementation issues, and there will be further tranches of legislation, but we're not in a position to comment on an individual taxpayer circumstances.
So the AOC's submission to these consultation processes indicates that these the changes to the tax treatment will reduce the AOC's funding by 2.5 million dollars a year or 10 million dollars over an Olympics quadrennium with less than two years till the Los Angeles Olympic Games, how does the government suggest the AOC recover the lost revenue which is intended to support the 550 Australian athletes we are sending to LA? Minister, that might be a question for you.
Sorry, Senator McKenzie, can you just repeat the question?
You're clocking the AOC's funding by a lazy $2.5 million a year from your tax changes, which will be $10 million over an Olympic quadrennium. How are you going to support the $550 athletes we are sending to Los Angeles as a result of this?
Well, can I can I just say we provide enormous support uh as we should, as anyone should to athletes representing Australia through primarily through uh the investments made uh through the sports portfolio? Um I'm not sure if there's anything else I can add to what has already been provided. Uh if I am able to, I will provide that on notice.
How does capturing the AOF non-charitable discretionary trust in the government's 30 per cent minimum tax rate on distributions make our tax system fairer?
Is that to me as well?
Unless DeMarco, it's an opinion. So it's you.
Can you repeat it? Sorry, I am trying to change my own.
I know as he's just behind you. You're dying to get out of the chair. We're not trying to get out, we just do have a I am here waiting all day to ask questions. Um how does capturing the Australian Olympic Foundation's non-charitable discretionary trust in the government's 30 per cent minimum tax rate on distributions make our tax system fairer?
So we are implementing uh structural change to the tax system by putting in place a 30 per cent minimum tax on discretionary trusts. Uh we are, you know, there's some legislation before uh the Parliament as part of implementing that. Um I don't think it's helpful for me to comment on individual entities and their arrangements, but I have no doubt that people, including across the APS will be happy to engage on the specifics of how that will impact on uh the um Australian Olympic Foundation.
What discussion um has Treasury had directly with the AOC on the impacts of the government's 26-27 budget tax changes? Marco.
Uh Senator have to take on notice whether or not we've met directly with the AOC or whether any of the Minister's offices have done so.
So the Army of Public Servants behind you haven't got that level of data when we've been able to do that.
Senator I think we outlined previously that there's been an extraordinary number of submissions and consultations received. We don't have an item.
Um you won't have met with Mark Up Bib, or maybe you have.
For those following on along at home, we are welcome in now. Um Senator the Honourable Tim Ayns.
My question was to the Minister, and maybe Minister Gallagher can take this on notice. Um but has Mark Arbib um head of the Australian Olympic Committee made representations to uh Treasury or to the Minister?
Well, you've invited me to take that on notice uh.
I was talking to Katie Gallagher. Um figuring missing your own.
We're delighted to uh take you up on that invitation. Take the question on notice.
Such a pleasure, Minister. Um what response does Treasury have to the AOC's concern that changes will impact um funding available to uh Australian Olympic pathways programs in our schools which provide pathways for young athletes?
Senator, uh unfortunately I'm not going to be able to expand further on what I've said. We are not going to comment on individual taxpayer circumstances. But we're not.
This is the Australian Olympic Foundation. This isn't some, you know, this isn't an individual business or an specific industry sector. This is a charitable organisation which funds our Olympic athletes that you're hitting by $2.5 million a year, $10 million. Might not seem a lot in the scheme of the federal budget, but for our athletes and for our Olympic effort, it is a significant contribution.
Senator, we've heard this and I've heard your representations. We are continuing to work with stakeholders on a range of transitional. Implementation issues.
Transition suggests nothing's changing. What does the AOC have to do to get an exemption?
Senator said we're continuing to work with stakeholders.
When will that work be completed?
Senator, I think, as I've sort of said in earlier parts of the session, we there are future tranches of legislation that will occur with regard to trust. I think we've got the first bill is in now. I think the government's already been very clear there will be future tranches of legislation.
Minister, do you think that the Australian Olympic Foundation should be exempt from the 30 percent tax on discretionary trusts?
Well, as the officials just indicated, we're working through these issues.
What do you think?
I'm sorry?
It's a bit crazy, don't you think, that 550 athletes heading off to LA are going to be having to find alternative sources of revenue? Because there's only one place they'll come, and that's to uh the federal government. Right now, they're able to pay for that support for our athletes from uh the revenue from their foundation and their trust.
Well, the Australian government's commitment to supporting our athletes to uh all the way through uh is very substantial, principally through uh the sports portfolio. Um we make a uh um significant contribution to uh Olympic uh effort.
Um you don't have to pay, that the Australian taxpayer doesn't have to pay and training is occurring right Well, um we we're making it you don't just create Olympic athletes like that overnight.
We we make a very substantial contribution um and uh there is a there is a tax reform uh process.
if they've discussed their particular issues if they're assessing the recommendations that they put forward in their paper.
Well, there's there's um multiple trenches of reform here that deal with uh excluded election trust options that the the AOC will be engaged with the government about these questions. Uh they will be resolved uh over time in an orderly way, and our commitment to sport is uh very large indeed.
Well, your commitment to sports about to get a lot larger if you continue to not exempt the AOC's foundation from this reckless trust arrangement. Can I just run through the recommendations? The Australian Olympic Committee's preference is that the targeted carve-out be structured so that the TAC is not paid by the trustee in the first place. Are you aware of that recommendation?
We're aware of their submission, Senator.
But not that recommendation on notice. Thank you so much, Minister.
Thank you. Um I'm rotating to Senator Smith.